Gross told Treasury Secretary Timothy Geithner and others at the Washington meeting that it was, in effect, absurd to think that private investors like Pimco would be willing to own mortgages at current interest rates without the kind of government guarantees provided via Fannie Mae, Freddie Mac and Ginnie Mae.
From Reuters:
"Without a government guarantee, mortgage rates would be hundreds -- hundreds -- of basis points higher, resulting in a moribund housing market for years," Gross said.
He said Pimco would not consider investing in a private, or privately insured, mortgage pool unless it was accompanied by 30% down payments -- far above the current norm.
Bill Gross Discusses Financing of U.S. Housing Market: Video - Bloomberg
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